Swiss crowdfunding breaks through 100 million barrier
In 2016, more than 100 million Swiss francs were raised on crowdfunding platforms for the first time. Compared to the previous year, the volume more than quadrupled from just under 28 million to 128 million francs. This is shown by the "Crowdfunding Monitoring Switzerland 2017" of the Lucerne University of Applied Sciences and Arts (HSLU).
Crowdfunding in international comparison
The Swiss market is not yet able to keep pace with the leading crowdfunding markets such as the USA, China or the UK. However, Switzerland has come somewhat closer to the leading countries in terms of both total volume and volume per capita. Today, an average of 15.50 Swiss francs per person is invested in Switzerland. "The Swiss market has also caught up with the leading countries in terms of the number of active platforms and the diversity of offerings over the past year," says study co-author and finance professor Andreas Dietrich.
Strong volume growth
In 2016, the number of campaigns and the volume increased significantly in all five categories. These are crowdsupporting, crowddonating, crowdinvesting, crowdlending and invoice trading (see box for details). Crowdlending recorded the largest increase (+597% to CHF 55.1 million), followed by crowdinvesting (+453% to CHF 39.2 million). Crowdsupporting/Crowddonating (+37% to CHF 17 million), as well as Invoice Trading (CHF 17 million), ranked third. For the first time since 2012, the crowdsupporting/crowddonating area, which often involves the support of creative and cultural projects, was replaced as the category with the highest volume by the areas of crowdlending and crowdinvesting, which are aimed more at financial gains.
Real estate crowdfunding as a growth driver
"In the areas of crowdlending and crowdinvesting, new platforms and offerings have emerged that have contributed strongly to growth," says Andreas Dietrich. These include the submarket of real estate crowdinvesting, which has only existed in Switzerland since 2015 and already reached a volume of CHF 32.4 million in 2016. With real estate crowdinvesting, investors can become co-owners of a property. The campaign volumes brokered are correspondingly high: "With an average volume of 2.7 million francs, these real estate investments record significantly higher sums than, for example, projects in the cultural and creative industries with an average of 13,000 francs," says Dietrich. Similarly, in crowdlending, loans to SMEs multiplied in 2016 to 28.1 million francs (previous year: 0.6 million francs).
In the crowdsupporting and crowddonating area, projects were brokered for a total of CHF 17 million. The largest share was accounted for by projects in the fields of technology and start-ups (CHF 5 million), sports and health (CHF 2.6 million), and music and concerts (CHF 1.9 million).
Family, friends and increasingly professional investors
Furthermore, the study authors note that crowdfunding is increasingly attracting the interest of professional investors in addition to families and friends: "We expect that larger companies will also become increasingly involved in crowdfunding," says Dietrich. On the one hand, well-known companies will use crowdfunding as a digital sponsorship channel and for marketing purposes. On the other hand, professional investors, such as pension funds, will increasingly finance various loans and invoices.
Renewed growth in 2017
With the strong changes in 2016, the study authors expect further growth of the crowdfunding market in 2017 with a volume of 300 to 400 million Swiss francs. "In particular, providers in the area of real estate crowdinvesting, in the area of SME crowdlending as well as crowdlending for mortgages will increase the volume above average," says Dietrich. He also expects high growth in crowdsupporting in the sports sector: "Clubs in particular are increasingly discovering crowdfunding as a source of financing, for example for new sports equipment, hall or pitch renovations."
Here the current study "Crowdfunding Monitoring Switzerland" can be downloaded free of charge in German and English.
Five forms of crowdfunding
- Crowdsupporting: Often for creative and cultural projects as well as campaigns from the sports sector. The investor receives a one-time return for his contribution in the form of products, artistic works or services. Those who co-finance a book, for example, receive a copy free of charge.
- Crowddonating: Primarily for social, charitable and cultural projects (e.g. donations to aid organizations). The support contributions are pure donations that are not linked to any consideration in return.
- Crowdinvesting: A start-up raises capital for the implementation of its business idea. In return, investors share in the company's success. Real estate crowdfunding, in which investors become co-owners of a property, also falls into this category.
- Crowdlending: Arranging loans to companies or private individuals. In return, the lenders expect a return commensurate with the risk. The projects financed in this way vary widely: from family cars and wedding preparations to SME loans or second mortgages.
- Invoice Trading: SMEs can have their outstanding invoices prefinanced by investors in order to bridge payment periods and free up liquid funds. The investors receive a return in return. (Source: HSLU)
